Sickness Industry

The July/August 2009 issue of Technology Review is especially good. In it there are articles on Wolfram Alpha, cap and trade, Obama’s technology stimulus, and nuclear fusion. It also contains an entire section on cloud computing and a thought-provoking essay on privacy in the age of Facebook.

The health-care industry’s reluctance to digitize its records is rooted in a desire to keep medicine’s lucrative business model hidden. Dangling $19 billion in front of a $2.4 trillion industry is not nearly enough to get it to reveal the financial secrets that electronic health records are likely to uncover–and upon which its huge profits depend. In those medical records lie the ugly truth about the business of medicine: sickness is profitable. The greater the number of treatments, procedures, and hospital stays, the larger the profit. There is little incentive for doctors and hospitals to identify or reduce wasteful spending in medicine.

According to a 2003 article by Dr. Steffie Woolhandler in the New England Journal of Medicine, administration accounts for 31 percent of expenses in the U.S. health-care industry, or more than $500 billion per year. (To put that in perspective, Google has spent well under 10 percent of that on all its R&D.)

I always laugh when people argue that a government health care system would be inefficient. I think they must never have visited a doctor’s office or dealt with their own health insurance company.